First Time Homebuyers
With mortgage rates at historic lows there’s never been a better time to buy your first home. Let a Mortgage Centre specialist help you understand the options available to you at this important stage in your life. Take comfort knowing that a Mortgage Centre specialist will provide you with all the information, sound advice, and assistance you need, every step of the way.
Topics listed below are something you’ll want to read over as you plan what may end up being your largest purchase. If there’s anything you’re unsure about, please don’t hesitate to talk to your local Mortgage Centre specialist. We’re prepared to do what we can to help make things proceed smoothly, quickly and effortlessly.
CHOOSING A REALTOR
Choosing the right realtor can help ensure you get the right house at the right price. You want a real estate agent whose attitude and availability inspire your trust.
Ask to see a personal brochure or resume. Look for experience in your area, in your price range, and letters of reference. Start by seeing who’s most active in your neighbourhood. How many properties have they sold in the last 3 months, how do they rank among peers, how many current listings do they have, and what has their ranking been over the last 5 years?
How long do they estimate it will take to find the one you’re looking for? What’s the average length of time in your area and in the current market? Ask whether they have support people to assist in the process. This also gives you an additional contact should you need it.
Do they have any special affiliations or packaged discount programs with other corporations that can save you money on your mortgage, moving costs, or on purchases for your new home?
An agent who makes regular sales calls and keeps you informed of listings and sales in your area probably pursues business aggressively. Set up appointments with a few agents from different companies and assess their presentations.
MAKING HOME HUNTING FUN
There’s no shortage of information available to help you make an informed purchase decision. Lenders, as well as the Canadian Bankers’ Association, the British Columbia Real Estate Association (BCREA) , the Province of British Columbia, and the Home Builders’ Association(CHBA), among others, have information to make home hunting stress-free and fun. Visit their websites for more information.
Take the guesswork out of shopping for a home by taking advantage of professional resources available to guide you through the many choices available when purchasing your first home.
AFFORDABILITY AND FINANCING
Talk with your Mortgage Centre specialist to review your current income and expenses. We’ll help you take into account how your new mortgage may change your monthly expenses. Securing a pre-approved mortgage with a lender that checks your credit rating will allow you to get an idea about how much mortgage you may qualify for, so you can have a price range in mind when you look at different properties.
A Mortgage Centre specialist can help you do a complete analysis based on net income and projected budgets to determine what you can comfortably afford. They will also discuss closing costs with you, such as land transfer taxes, legal fees, prepayment privileges, mortgage life insurance and other disbursements.
SELECTING THE RIGHT MORTGAGE
Your Mortgage Centre specialist can help you determine how much you can afford, obtain a pre-qualified approval, and select the mortgage that’s right for you! After your real estate agent draws up an Offer To Purchase between you and the vendor, contact your mortgage broker.
Conventional vs. High-Ratio or Insured Mortgages
A conventional mortgage – is a mortgage that has a principal amount that is no more than 80% of the appraised value or purchase price of the property, whichever is less. The principal amount of a high-ratio or insured mortgage is usually more than 80% of the appraised value or purchase price.
An insured or high-ratio mortgage – may also be referred to as an NHA mortgage because it may be entered under the provisions of the National Housing Act and in many cases must, by law, be insured. In general, the borrower pays the insurance premium as well as application, legal, and property appraisal fees.
Closed vs. Open Mortgages
Closed mortgages generally offer lower interest rates than open mortgages of the same term, but open mortgages let you pay off as much as you want, any time, without paying a prepayment charge.
Short Term vs. Long Term
The term you select is important, too. Short term mortgages are appropriate if you believe interest rates will be lower at renewal time. Long term mortgages are suitable if you feel current rates are reasonable and you want the security of budgeting for the future. This may be especially important for first time homebuyers.
Fixed Rate vs. Variable Rate
You can choose a fixed or variable interest rate. A fixed rate mortgage makes it easier for you to budget for whatever term you select. A variable rate mortgage fluctuates with the market.
*Specialty mortgages creatively combine the best of all worlds. Your Mortgage Centre specialist can help you select the options that are best for you.
BEFORE YOU SIGN THE OFFER
Select a lawyer as you’d select a real estate agent: seek competitive fees, excellent service, knowledge, and approachability – in other words, value.
Involve your lawyer before you sign the offer, which becomes a legal Agreement of Purchase and Sale once you and the seller sign it. Have your lawyer read the document carefully and review it with you.
Once it’s signed and accepted, your lawyer will order a series of searches from various municipal offices to ensure that the vendors haven’t been sued, that they’ve paid all of their property taxes and major utility bills, and that there are no outstanding mortgages or liens on the property. Your lender and lawyer will co-ordinate and draft the appropriate documents. After that is completed, your lawyer will notify the property tax offices as well as the utility offices that you will be the new owner as of the closing day.
ON CLOSING DAY
Your lawyer will close the transaction with the vendor’s lawyer. At this time, the balance of the purchase price will be exchanged for the keys to your home and closing documents will be exchanged. Your lawyer will register the deed or title transfer and the mortgage. Finally, you pick up the keys to your new home!
After closing, your lawyer will send you a reporting letter and copies of all the documents you signed including the deed, the mortgage, and the survey, as well as a summary of the flow of funds. Be sure to keep these important records in a secure location.
Your house is like a savings account. Start making convenient withdrawals!